NEW YORK – Snow and slow CE demand and a data breach were among the reasons why chain stores experienced a winter of discontent in the last quarter.
Among retailers reporting, Walmart U.S. president/CEO Bill Simon said comp sales within the entertainment category, which includes CE and toys, fell by the mid-single digits despite a strong start to the holiday season.
Sister chain Sam’s Club mirrored the performance in CE. Sales during non-promotional periods were soft, said Rosalind Brewer, president/CEO of the warehouse club, particularly in “highly competitive categories” like TVs, portable electronics and wireless.
“Technology and entertainment has been challenged over the past year, experiencing deflationary pressures and ever-changing member preferences,” she said on an earnings call. “The team is actively working to reenergize our assortment, predominantly in mobile, driving sales with new and exciting technology.”
The discounters were also pressured by the severe winter weather, which forced store closures, the executives said.
All told, Walmart’s net sales rose 2.4 percent to $76.4 billion for the fourth quarter ended Jan. 31, and comps declined 0.4 percent, while Sam’s Club net sales edged up 1.3 percent to $14.7 billion and comps slipped 0.1 percent. Net sales for parent Wal-Mart Stores were $128.8 billion, an increases of 1.4 percent, and net income dropped 21 percent to $4.4 billion.
Like Wal-Mart and Best Buy , Conn’s also cited slowing CE sales trends, but still enjoyed higher TV prices on key models, and projected a 13.2 percent comp increase in electronics, for its fiscal fourth quarter, ended Jan. 31. Moreover, majap comps are expected to rise 30 percent, furniture and mattress comps 60 percent, and comps for computers and tablets will likely soar 65 percent, which will help deliver an expected 45 percent increase in net retail sales, to $301 million.
Nevertheless, an increase in late payments from private- label credit card customers – while still below the industry’s delinquency-rate norm – forced the multiregional chain to lower its earnings outlook, and the stock took a beating from Wall Street. Conn’s will formally report its financial results on March 17.
Private-label credit also tripped up Target in its fiscal fourth quarter, ended Feb. 1. The infamous Dec. 19 data breach hurt net earnings, which fell 46 percent to $520 million, and also waylaid U.S. sales, which fell nearly 4 percent to $21.5 billion after a strong start to the holiday season. Despite the falloff, CE enjoyed a comp sale increase led by mobile phones, tablets, and video game hardware and software, supply chain executive VP Kathryn Tesija said on an earnings call.
Within the home improvement channel, Lowe’s and The Home Depot also pointed to fourth-quarter strength in white goods. On their respective earnings calls, Home Depot chairman/CEO Frank Blake cited a 180 basis point gain in majap market share, and Lowe’s chief financial officer Bob Hull said appliances were one of three categories that “propelled the big-ticket growth” during the period.
Lowe’s’ net earnings rose 6.3 percent to $306 million for the quarter ended Jan. 31, while net sales increased 5.6 percent to $11.7 billion and comps edged up 3.9 percent. In contrast, Home Depot’s profits slipped 0.8 percent to $1 billion for the three months ended Feb. 2, net sales fell 3 percent to $17.7 billion, and comps rose 4.4 percent chain-wide. Results were also mixed for Office Depot. In its first financial report following its November merger with OfficeMax, the No. 2 office supply chain reported a net loss of $144 million for the quarter, ended Dec. 28, compared with a year-ago net loss of $110 million, reflecting merger-related expenses, asset impairment and other charges. Total sales rose 33 percent to $3.5 billion.
U.S. retail sales rose 31 percent to $1.4 billion and comps declined 4 percent on decreased traffic, transactions and order size.
The chain closed 23 stores and opened two during the quarter, and planned to complete a “comprehensive reorganization” of the company by the end of last month, chairman/CEO Roland Smith said.